back to article Apple CEO visits EU regulator to discuss tax bill

Apple chief executive Tim Cook met European competition commissioner Margrethe Vestager in Brussels last week, apparently to discuss the European Commission's investigation into the company's tax affairs. The Commission confirmed that a meeting had taken place but said it could give no further details. The Commission is …

  1. Zog_but_not_the_first
    Boffin

    Just a minute...

    I've just realised that I've never seen Tim Cook and Paul O'Grady at the same time!

  2. ratfox
    Angel

    It feels to me that there are two issues.

    On one hand, big businesses like Apple pay very little tax to the UK because they claim to sell everything out of Ireland. From what I've read, this is a perfectly straightforward application of the free trade agreements, possibly morally dubious but absolutely and completely legal!

    On the other hand, big businesses like Apple pay very little tax to Ireland because of accounting and tax loopholes that would make a knot theory expert pale with envy.

    The EU here is examining whether Apple shouldn't pay more tax in Ireland. Even if they achieve their goal, this does not necessarily mean that they will start paying tax in the UK.

    1. DavCrav

      "The EU here is examining whether Apple shouldn't pay more tax in Ireland. Even if they achieve their goal, this does not necessarily mean that they will start paying tax in the UK."

      Indeed, but once Apple are forced to actually pay tax somewhere, the financial benefits of channeling it all through Ireland start to fall away.

      1. Anonymous Coward
        Anonymous Coward

        Not really

        Ireland still charges only 12.5%, and that isn't being questioned by the EU. Only the special arrangements that Apple and others have that allow paying even less.

        If Apple is forced to pay 12.5% for all their Ireland profits, so long as that is the lowest rate in the EU, it still makes sense for them and all their high tech buddies to funnel their EU profits through Ireland. The UK will still get screwed to the extent that profits earned in the UK are moved to Ireland to avoid the UK's higher rate.

        The example with Google in the articles today is perfect. The UK is allowing Google to calculate revenues in the UK based on advertising revenues from UK based companies. Nothing stops Google from asking a company "hey can you set up an Irish subsidiary to pay us, so that revenue counts as Irish and we can pay at Ireland's much lower rate?" Result: the UK gets screwed. At least with Apple they are selling directly to the consumer, so it is easy to count up the revenue they are earning in the UK.

        How costs are accounted for is another problem, but at least there are well established methods for Apple to do so (i.e. the wholesale cost they charge an electronics shop to buy iPhones that are sold to consumers at retail) whereas with Google it is much more difficult - what percentage of their servers account for UK advertising, and what percentage of their overall R&D should be claimed as a cost for UK advertising?

  3. Mage Silver badge

    Apple products support more than 1.4 million jobs across Europe

    O’Reilly?

    Doing what?

    Actual employees?

    1. Dan Wilkie

      Re: Apple products support more than 1.4 million jobs across Europe

      Actual jobs.

      And probably a bunch of people who are randomly included because they use an ipad at work.

      And so on

      1. Anonymous Coward
        Anonymous Coward

        Re: Apple products support more than 1.4 million jobs across Europe

        There are 5000 employees in the factory in Cork, I don't know if they have any other factories in the EU but there might be a few more about. There are Apple stores all over the EU, which account for tens of thousands.

        The bulk are probably software developers who develop for OS X and iOS. Most would be part time - some guy with a full time job who develops iOS apps in his spare time and makes a few thousand bucks a year off them if he's lucky. But Cook didn't say "full time jobs", or that they were Apple employees.

        I'm sure it is not counting someone who is using an iPad at work, that's ridiculous (and if so the number would be far higher, considering how many using iPhones at work as their BYOD)

        1. Mike Shepherd

          Re: Apple products support more than 1.4 million jobs across Europe

          Even if you can bulk it to 100,000 or 500,000 jobs, how does it justify not paying tax?

        2. Naselus

          Re: Apple products support more than 1.4 million jobs across Europe

          "I'm sure it is not counting someone who is using an iPad at work, that's ridiculous (and if so the number would be far higher, considering how many using iPhones at work as their BYOD)"

          If you look at the actual figures, it's not that ridiculous tbh. Apple don't actually do spectacularly well on the continent. The regularly make twice as much money in the USA alone as they do in the entire EU, and the EU has nearly three times the population of the US; and a the lion's share of the per capita sales in the EU are in the UK.

          In Germany, for example, iOS averages just 15% market share (and Windows Phone averages around 10% - and even surpasses iOS from time to time). France and Italy are much the same story. These kind of figures sound bizarre when you're in the Anglosphere (where iOS market share is 35% in the UK and 40% in the US), but the vast majority of companies in the EU probably don't own any Apple devices at all, or even have many brought in for BYOD.

    2. Mike Shepherd

      Re: Apple products support more than 1.4 million jobs across Europe

      Perhaps Cook is a graduate of the Camila Batmanghelidjh school of statistics.

  4. cs94njw

    "Financial services firm JP Morgan said in a research note to investors in May 2015 that Apple could be liable to pay as much as $19 billion,"

    Wow... they need Google's negotiation team...

    1. Yet Another Anonymous coward Silver badge

      "could be liable" doesn't mean they will, Ireland could negotiate a little 99.99% discount for them to stay there

      1. DavCrav

        ""could be liable" doesn't mean they will, Ireland could negotiate a little 99.99% discount for them to stay there"

        It's that kind of shit that is why the EU is looking at Ireland and Apple's tax dealings in the first place.

        1. Anonymous Coward
          Anonymous Coward

          Yes, it is like the fines for pirating music. If they catch you pirating 1000 tracks you "could be liable for up to $150 million" based on $150K per song in the US. No one will actually end up paying that much.

          It will be negotiated, and whatever Apple pays won't cost them anything in the long run. When they finally bring that money in from overseas, the foreign taxes paid on it are a direct credit on US taxes due. So unless they are able to bring it back into the US at a massive discount from the standard 39% rate, every dollar they pay in taxes overseas is one dollar less they will owe on it in US taxes when they repatriate it. So Apple doesn't care what they end up paying, other than the fact this will be a bill due today rather than some unknown future likely years away when they bring the money back into the US (so it will cost them the interest they could have earned on that money in the meantime)

          1. Naselus

            "So unless they are able to bring it back into the US at a massive discount from the standard 39% rate,"

            Which is exactly what Apple (as with most US multinationals) are waiting to do anyway. The large cash piles that these multis keep offshore waiting to repatriate are kept there precisely because the US government regularly throws open tax holidays to bring it back in from the cold, knocking rates down to near-Irish levels.

            Apple also likely will care a fair bit about losing the interest on x billion, tbh. And while it's unlikely to impact Apple themselves, the precedent might have some worrying impacts on heavily-leveraged, smaller companies with similar 'special agreements' across the EU, who might find that their value has turned negative overnight.

            1. Anonymous Coward
              Anonymous Coward

              @Naselus

              They don't "regularly throw open tax holidays". They did it once, back in Bush's administration. People were worried too much money was being held overseas, they wanted it brought back to stimulate the economy and job growth which was still in the doldrums after 9/11. A bunch of money was brought back, it is generally accepted that it had little or no impact on economic growth or hiring - it was mostly used for stock buybacks or paying down debt.

              The longer term result was that instead of only some companies holding money overseas, now almost every company does, so the pile is a lot bigger. Giving in with another tax holiday would be exactly the wrong thing to do - at least not at the very low rate they did before. It would only encourage companies to try even harder to keep their overseas earnings overseas, and maybe even try to find legal ways to turn US income into offshore income and make the problem even bigger.

    2. Naselus

      "Apple could be liable to pay as much as $19 billion,"

      But that's almost all the profit they make from 3 USB cables and a docking station!

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